Saturday, September 10, 2011

The Business Case for Change

"If you don't like change, you will like irrelevance even less."
- General Eric Shinseki

Deming's Quality Chain Reaction

Our business case for change lies in the sensitivity that "Learning is not compulsory, neither is survival" as Dr. Deming was fond of saying. Key to our survival strategy is Deming’s Quality Chain Reaction (figure below) where pursuit of quality by designing systems capable of people doing things right the first time increases productivity, decreases costs, and in turn lowers prices and increases profits and customer satisfaction.  This is the basis for creating a culture of continuous improvement and change that sees quality as more than a desirable outcome but as the foundation of a business strategy to remain competitive.

The term Continuous Improvement connotes the ongoing nature of the strategy. According to Deming, Quality is not a state to be achieved but rather an ongoing company-wide effort at continual improvement.  This is THE PROCESS- the way everyone thinks, talks, works and acts every day. This is the definition of culture- the way we all behave.

But don’t just listen to Deming's rationale for continual change. Henry Ford got it right almost 100 years ago:

"Our own attitude is that we are charged with discovering the best way of doing everything, and that we must regard every process employed in manufacturing as purely experimental. If we reach a stage in production which seems remarkable as compared with what has gone before, then that is just a stage of production and nothing more."

The success of this strategy is obvious in comparing organizations in which Continuous Improvement is at the core of their DNA. The Lean 20 is a list of Lean companies suggested by readers of Evolving Excellence and Superfactory. The Lean 20 Average of 12.71% is a simple average of the year to date performance of each company, which can be compared to the S&P 500. The 10 top performers returned 16- 32% more than the S&P 500 so far in 2010.


W. Edwards Deming: Out of the Crisis. MIT Press 2000.


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